Celebrities making money out of other peoples' misfortunes

Carole Vorderman.

Maths genius. TV personality. Must be a financial wizard and what a lovely lady.She is well-known for having a kind of expertise and this is transferred to the mind of the consumer. Gives people the feeling that FirstPlus can help restructure severe debts and solve all their financial woes.

Yeah...and lose their homes. And take on yet more debt and get busted on interest.

Having watched Carole and others, like June Whitfield et al, advertising the wares of their loan shark patrons for over a decade, I wondered if anyone else feels let down by celebs that advertise financial products aimed at particularly vulnerable people? Or is it just me?

[Jester]

Re: Celebrities making money out of other peoples' misfortunes

It's not really any different to the likes of Michael Gambon (aka Dumbledor for the younger generation) doing the voice-over for HSBC telling us what a wonderful and listening bunch of people they really are.

At the end of the day, the celebs are really just cashing in on their fame to make an easy buck or ten. Most people in their situation would probably do the same if we are honest. Where money is concerned, the moral of what one might be doing is often put to the background (as I recall, Peter Kay advertises John Smith Bitter despite actually being tee-total in real-life).

Imagine a world where any celebrity putting their name to a product was made equally culpable to the company whose wares they are advertising if those wares were deemed to be immoral or even illegal. I am sure the line of celebs to advertise those wares would soon disappear and thus most advertising campaigns would suddenly disappear rendering things we take for granted (such as commercial TV/Radio) disappearing overnight due to lack of revenue, or becoming subscription based.

Personally, it makes my blood boil when I see people like Anne Diamond advertising 'cash for gold' type adverts. But they are an evil that in all honesty will never disappear for reasons of commercial necessity in such things as commercial TV/radio !!

[EXC]

Re: Celebrities making money out of other peoples' misfortunes

How about Micheal Parkinson ripping off pensioners?



Laura Whateley
Last updated October 16 2010 12:01AM

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  Celebrity endorsement: Michael Parkinson is one of a number of showbiz personalities featuring in advertisements for controversial life insurance products The Advertising Archives

Advisers are warning pensioners that over-50s life cover is likely to cost more than your family will receive.

Celebrity endorsements from trusted TV personalities, including Michael Parkinson, June Whitfield and Cilla Black, are luring pensioners into buying unsuitable life insurance policies that can leave them thousands of pounds out of pocket, an investigation by Times Money has found.

Over-50s life cover has become one of the most popular types of life insurance on the back of high-profile daytime TV advertising campaigns offering free gifts, including M&S vouchers and Argos gift cards, to those who sign up.
But most pensioners who buy these policies end up paying more in monthly premiums than their families will receive in payouts when they die. And once they have signed up, many insurers require customers to continue paying the monthly fee — which can range from £6 to £60 — until death. If they decide to cancel a policy, they receive no cash payout, nor will they have any premiums returned — even if they have paid into the policy for decades.
Steve Rees, the managing director of CBG Financial Services, an insurance broker, says: “Pensioners should beware of these policies. Unless they die within a certain time period, they will end up paying more in than their families will receive out. Taking out one of these policies is a gamble that is loaded in favour of the insurer. It is a shame that high-profile celebrities give their backing to such poor-value products. This type of plan is short-changing a vulnerable group of customers who could get a much better deal elsewhere. Older people need decent advice and a policy that offers good value rather than a free carriage clock.”

The Financial Services Authority has warned insurers that they must make it clear in their advertisements that this type of insurance can lead customers to lose money. But Times Money has been inundated with complaints from readers who say that their elderly parents signed up for this insurance in the 1980s and are still being charged hundreds of pounds, despite being promised paltry payouts that will not even cover funeral expenses when they die. And these policies are still being sold on a massive scale by respected companies, such as the Post Office, Saga and Tesco.

Over-50s life cover plans, sometimes known as life assurance plans or guaranteed lifetime protection plans, offer a guaranteed cash lump sum paid to the estate of the customer when he or she dies. Premiums vary but they usually start at as little as £6 or £7 a month and go up to £60 a month. The larger the premium, the greater the cash lump sum your estate receives when you die.

Take the product that Michael Parkinson advertises: the Guaranteed Over 50 Plan from AXA Sun Life Direct, which has been bought by 700,000 people. It will, for example, pay a cash lump sum of £570 on the death of a man who takes out the policy aged 65 and pays a premium of £6 a month. The deal sounds a good one because the premiums are so small. That is until you take into account that a 65-year-old man is, on average, expected to live for a further 17.6 years — until he is 82. Over 17.6 years, paying £6 a month, a 65-year-old would pay £1,260 into the plan, more than twice as much as his family will receive from AXA when he dies. If the he lives to 100, he will pay in £2,520 — still with a payout of only £570 on death. New customers do, however, have free gift vouchers thrown in.

Michael Parkinson was unavailable for comment, but a spokesman for AXA said: “We are very clear about the risks and benefits of this product, the level of cover for a given premium and that premiums are payable throughout life. We have conducted extensive research which demonstrates that customers understand these details.”

The main appeal of this type of cover is that all individuals aged 50 to 85 are eligible to take out the cover without any medical assessment. However, this means that the deal is rarely a good one. Matt Morris, of Lifesearch, the life insurance broker, says: “These plans should come with financial health warnings. Because there is no underwriting involved, all customers pay the same premiums irrespective of their health. That means that it costs a lot compared with other life insurance products, and the eventual payout rarely makes it worth it. We’re not fans of these policies at Lifesearch, so we do not sell them.”

To receive a payout at least equal to the amount contributed, a 65-year-old man would have to die within eight years of buying the AXA over-50s product. If he dies within two years of taking out the policy, he will not receive the cash lump sum. Instead, the payout will be only one and a half times the premium he has already paid in, up to a maximum of £216. This means that the customer gains a reasonable amount of money only if he dies within a small window of time — within six years, between the age of 67 and 72, in the case of a 65-year-old male customer. Even then, the money does not accrue interest and diminishes with inflation.

Had the same customer put £6 a month in a simple savings account paying 3 per cent interest for eight years, he would leave £603.72 to his estate — more than £30 better than the AXA policy.

Even better would be to invest in a tailored life insurance product. If, aged 50, you paid £25 a month into AXA Sun Life’s whole-of-life plan with guaranteed premiums, your family could receive a payout of £18,316 on your death,
compared with only £7,865 if you paid the same monthly premiums for its over-50s plan.

Insurers argue that they make it clear in marketing literature that customers may not receive back as much as they pay into these policies, so are not guilty of mis-selling. However, the advertisements use emotive language and imagery to sell the cover. All focus on providing for “loved ones” and many suggest that the cash should be used to pay for funeral care or to leave a nest egg for grandchildren — even though the lump sum is not always enough to cover the cost of a funeral. None of the insurers let on that only those customers who are in poor health when they take out the product are likely to benefit from it.

Another problem is that once signed up for the policy a customer cannot cancel it without losing money. No over-50s plan has a cash-in value, so if you cancel the policy you will not have any of your premiums refunded. This leaves many elderly people with a dilemma: do they continue paying the premiums to stop losing any more money?

Jacqueline Brooker wrote to Times Money after she started helping her mother — who is 92, disabled and registered blind — with her finances. She discovered that her mother has been paying £6 a month to Sun Life since March 1989 to cover funeral costs.

Mrs Brooker says: “All she has been receiving every year is a statement to say that the sum assured on death is £375; nothing to indicate how much she has paid in so far. By my calculation she has paid almost £1,400. My mother was shocked to receive this information and requested that the policy be cancelled, because her payments are not earning her any interest. We felt that whatever she received as surrender value could be much better invested and that Sun Life should no longer profit from her meagre pension. The surrender amount, however, was a paltry £153.90. I phoned the company to complain that I felt that my mother had been exploited and that Sun Life had kept her in the dark, but I received a dismissive response.”

Again, the insurers’ defence is that they warn customers that this product is for life in their terms and conditions.

Some insurers do allow customers to stop paying premiums after a set period of time — for example, after 20 years or when they reach 90 — but by that point the customer has already paid in far more than he or she will get back.

Dorothy Paterson has power of attorney for her 86-year-old mother-in-law. When going through her mother-in-law’s financial affairs, she found a life policy with Aviva, into which she had been paying about £7 a month since she was 67. She will receive only £1,000 when she dies, but she has already paid Aviva about £1,500. Ms Paterson says: “If I cancel the policy, she won’t receive the £1,000 payout, so will have lost £1,500. Should I continue to pay into this policy to ensure that my mother-in-law’s estate gets some money back?”

Aviva says that it has now changed its policy so that no new customers will pay premiums for more than 20 years.

[The Debt Star]

Re: Celebrities making money out of other peoples' misfortunes

yo, Jester. Thanks.

I agree with most of what you say and there's little point getting too worked up over something that will always happen on our materialistic society.

I do think you need to consider this though: while you may be able to discriminate whats going on and recognise it as cynical commercialism, there are plenty of others out there who can't make that distinction.

Also, individuals have a choice whether to appear on those ads and they can, if they wish, decline that £100K for doing so on conscientious grounds. After all, in the 1700s slavery was legal, part of the commercial reality and acceptable. Our celebs, if they lived back then, would probably have advertised that as well.

Well slavery is morally indefensible. In 1807 it got banned. Not all that long ago in real terms. The credit industry in this country may well be the equivalent evil. And just like the economic slavery the celebs encourage in their FirstPlus, Norton and Ocean Finance whatever adverts, a time may come when that is morally indefensible as well.

Yeah, agree EXC, add Parky to the list. A list that IMO appears to be endless.

[Jester]

Re: Celebrities making money out of other peoples' misfortunes

Just out of interest, I wonder if anyone feels differently about adverts that are voiced-over by celebrities ?

At least in voice-over adverts, though one may recognise the voice, they may not necessarily remember (or even realise) that it is a celeb. I know I have seen plenty of adverts where I have recognised the voice but failed to pinpoint who the voice belongs to (Rob Brydon has done voice-overs for most of the car industry for example, but though I recognised the voice it was sometime before I finally realised whose voice it was - which I found out through Top Gear).

At least with voice-overs, you don't see the celeb in question. Though the question of whether it is morally any more valid is still questionable.

[WendyB]

Re: Celebrities making money out of other peoples' misfortunes

Isn't this a bit like saying it's morally wrong to work in a factory, say, producing cars, because of their impact on the environment? Take it to the nnnnth degree, everyone has to earn a living, and once you've earned it, maintain it. Legal versus moral?

[shell]

Re: Celebrities making money out of other peoples' misfortunes

Well at least some so called celebs have a few morals.

http://www.legalbeagles.info/forums/...ad.php?t=20633

I do have a major problem with them advertising financial products though. Because they are constantly on our screens, many people feel that with them constantly in our houses, they are old friends, therefore they can be trusted to tell the truth. I bet most of these celebs have no idea of what they are trying to sell, they get into the studio, read from a piece of paper, get paid loads of money. Irresponsible - yes. Greed - most definitely

[The Debt Star]

Re: Celebrities making money out of other peoples' misfortunes

Well at least some so called celebs have a few morals.

http://www.legalbeagles.info/forums/...ad.php?t=20633

I do have a major problem with them advertising financial products though. Because they are constantly on our screens, many people feel that with them constantly in our houses, they are old friends, therefore they can be trusted to tell the truth. I bet most of these celebs have no idea of what they are trying to sell, they get into the studio, read from a piece of paper, get paid loads of money. Irresponsible - yes. Greed - most definitely

Exactly, that's the view I hold as well.

And the credit culture of our civilisation today, since the '90s, cannot be compared to working in afactory. The credit culture has created a form of economic slavery - banks throwing loans and credit at folks who couldn't afford it long term - and celebs are encoyraging the continuance of that.